Plus   Neg

ConocoPhillips Q2 Profit Tops View, But Revenues Miss


ConocoPhillips (COP) posted profit for the second-quarter 2018, compared to a loss in the prior year, primarily due to the absence of non-cash impairments of APLNG, San Juan and Barnett, and latest-quarter higher realized prices, partially offset by the absence of the gain on the Canada disposition. Adjusted earnings per share topped analysts' expectations, while quarterly revenues missed their estimates.

"We're benefitting from higher oil prices, but also driving underlying cash flow expansion. In accordance with our priorities, we've differentially allocated excess cash toward debt reduction and distributions, while continuing to grow our diversified, low cost of supply resource base. Since we launched our disciplined strategy almost two years ago, we've met or exceeded all our key strategic milestones," said Ryan Lance, chairman and chief executive officer.

Earnings for the second-quarter 2018 were $1.6 billion or $1.39 per share, compared to a loss of $3.4 billion or $2.78 per share second-quarter 2017.

Excluding special items, second-quarter 2018 adjusted earnings were $1.3 billion, or $1.09 per share, compared with second-quarter 2017 adjusted earnings of $0.2 billion, or $0.14 per share. Analysts polled by Thomson Reuters expected the company to report earnings of $1.08 per share for the second-quarter. Analysts' estimates typically exclude special items. Special items for the latest-quarter were primarily driven by an unrealized gain on Cenovus Energy equity and recognition of deferred licensing revenue, partially offset by pension settlement expense.

Adjusted earnings were improved compared with second-quarter 2017 primarily due to higher realized prices. The company's total realized price was $54.32 per barrel of oil equivalent or BOE, compared with $36.08 per BOE in the second quarter of 2017, reflecting stronger marker prices and a more liquids-weighted portfolio.

Total revenues and other income for the quarter grew to $9.24 billion from last year's $8.88 billion. Wall Street analysts had a consensus revenue estimate of $9.93 billion.

Production excluding Libya for the second quarter of 2018 was 1,211 thousand barrels of oil equivalent per day or MBOED, a decrease of 214 MBOED compared with the same period a year ago. The second-quarter volume impact from closed dispositions was 272 MBOED in 2017.

Excluding the impact of closed dispositions, underlying production increased 58 MBOED, or 5 percent. The increase came primarily from growth in the Big 3 unconventional assets and other major projects, which more than offset normal field decline. Production from Libya was 38 MBOED.

The company increased full-year 2018 production guidance to 1,225 to 1,255 MBOED to reflect the higher-than-budgeted partner-operated activity, improved performance across several operating areas and completion of the Alaska Western North Slope bolt-on acquisition. Third-quarter 2018 production is expected to be 1,215 to 1,255 MBOED, which reflects typical seasonal turnarounds and maintenance activity. All production guidance excludes Libya.

The company's 2018 operated capital scope remains unchanged, excluding acquisition-related activity. However, the company is adjusting its capital guidance to $6 billion from $5.5 billion, reflecting a higher $65 WTI per barrel price environment versus the $50 WTI per barrel initially assumed. This guidance excludes the previously announced $0.4 billion bolt-on acquisition in the Alaska Western North Slope and $0.1 billion to acquire additional acreage in the Montney in Canada.

Based on higher expected production, the company has increased its full-year guidance for depreciation, depletion and amortization expense to $5.9 billion from $5.8 billion.

COP closed Wednesday's regular trading at $71.51, up $0.66 or 0.93 percent.

For comments and feedback contact: editorial@rttnews.com

Business News

Follow RTT